As @Ryan Paltridge mentioned, it is best to work with with someone in the area, ideally someone that is doing or has done what you are trying to do, as one would understand what you are trying to achieve and follow the Return/ROI/Cap Rate/Cash on cash return (which ever way you are analyzing your deal)  you are looking to accomplish. 

Turns out they can do refi's but they will use which ever is lower between the original loan and new appraised value. 

He's looking to turn it into a 4br 3bath and possibly turn the basement into a livable space.He offers a promissory note for a payout of either a set interest rate or percentage of the profit, whichever is greater.

or wait to do an official appraisal until we're ready for the next steps in whichever path we decide? 

For DTI projections on purchases they will usually use either 75% of appraised rent off the appraisal, or current rent documented on a lease, whichever is LESS.

Now you've doubled what you got in your account...Now the catch is you can only borrow 50% or up to $50K whichever is less. 

Hey Tate, here's what my commercial lender @ US Bank uses for pro forma debt coverage calculations if he doesn't have 2 years and YTD historical data (basically, seller's schedule E's)Vacancy: 10% of gross rents, unless there is sufficient market data at the bank's disposal to justify lower vacancy rates for the type of asset in question, OR detailed historical vacancy data from seller.Management: 3% gross rents or actuals, whichever is higher, with property management agreement provided to close.Cash Reserves: 3% of gross rentsTaxes: Actual data used.Insurance: 3% of gross rents, or as shown by insurance policy.Operating reserve: 20% - 25% depending on the type of asset and amount of historical data provided.

Scott shall not be considered active under the following circumstances: unemployed while seeking gainful employment, on disability from full time employment, retired from government employment, or other circumstances out of control and atypical to choosing to pursue his housing business endeavors as his sole source of primary income. 1.Should Scott choose to “actively” engage in housing as his source of employment as defined above, Scott agrees to give 25% (twenty five percent) of his net profits accrued from his active efforts during the period of marriage to wife in the case of a divorce.2.Payment of such percentage of funds shall be payable over 120 equal monthly payments, or equivalent to no greater than 10% of Scott’s New York State Adjusted Gross Income, verified annually with payments adjusted the 1st of November each year, whichever is less, to ensure no undue hardship to Scott or the business will be endured.

Can borrow up to 80% of the acquisition or up to 50% of the “as-completed” value or ARV (whichever is lesser).Seems like it may be a good loan for someone trying to do a "BRRRR" or similar type project. 

If I didn't get the discount, I would compare those two and the one that Cozy uses and use whichever I felt gave me the best report.